After toughing out a 2008 that saw 30-plus percent declines in the number and total dollar-volume of sales, island real estate agents are bracing for an even slower 2009, as the nationwide economic malaise shows no signs of easing up any time soon.

Most say it’s far too early to tell just how stagnant the market will be, but if January is any indication, real estate is going to be a particularly tough sell this year. The number of transactions through Jan. 31 (16) declined 48 percent from last January’s 31, with dollar volume down 68 percent to $21.8 million from $69.07 million in 2008.

Inventory is also particularly high, with about 500 homes currently on the market compared to approximately 400 this time last year.

“It’s slow, slow, slow,” said Penny Dey, co-owner of Atlantic East Real Estate. “The real story here is the lack of activity. People are holding back. We’re showing a lot of property, but not a lot is moving.”

Jennifer Shalley of Windwalker Real Estate sees the impact of the nationwide banking crisis that began last fall continuing to resonate throughout the year.

“A lot of what happened post-September, with the financial crumbling of Lehman Brothers, will trickle through 2009,” she predicted. “This was the slowest January we’ve seen in 10-plus years.

“We’re definitely on track for a slower year,” she continued. “From September through December, a lot of people didn’t even know how to digest what was happening. Because of that, the first quarter will be quiet, because of transactions that weren’t started in the fourth quarter.”

The trend has been downward for the past three years. After peaking at $1.19 billion in 2005 and slipping to $917.2 million the following year, total dollar-volume fell 32 percent from $841.47 million in 2007 to $568.05 million in 2008. The number of sales plunged 36 percent, from 446 to 285, according to statistics compiled by H. Flint Ranney of Denby Real Estate. Nantucket homes closed the year selling for 82 percent of their original listing price and 93 percent of their listing price at the time of sale, the lowest ratios in years, according to statistics compiled by Ranney and Dey, respectively.

“It’s not a pretty picture. There is no question that the volume of transactions is down. Anyone who thinks that this is just a blip is fooling themselves. It will be a little while before people will be comfortable again,” said Ken Beaugrand of Nantucket Real Estate.

Summer rental bookings are down – although they are slowly starting to pick up, some agents said – and foreclosures are up, although brokers were quick to point out that most have been on second or third vacation homes and spec houses, not those occupied by year-round Nantucketers, and most island property owners don’t have to sell like so many of their mainland counterparts.

“Pockets of urgency”

“There are pockets of urgency, but the fact is, most people here don’t have to sell, still. It’s a discretionary market. There’s a perception that this market is like others in terms of foreclosures and distress sales, but that wasn’t true in 2008,” Dey said.

Beaugrand agreed. “Because of the nature of our market, we’re a little bit better insulated from what is happening on the mainland. Because it’s a discretionary purchase, most people aren’t forced into selling the property. They can wait longer to get the price they are looking for.”

One bright spot for patient sellers can be found in the average and median home prices. They actually rose last year, both by 14 percent. The average home price at the close of 2008 was $2.56 million, and the median price came in at $1.7 million.

Silver lining

That being said, for those buyers able to secure financing or looking for a new place to invest earnings they pulled out of the financial markets, deals can be had if they are patient and willing to negotiate, agents said.

“I’ve never seen as many good deals in the marketplace as I’m seeing right now,” said Craig Hawkins of The Maury People/Sotheby’s International. “There are amazing deals to be had in all price ranges. There’s a lot more on the market, there’s so much more competition, and some people do need to sell. They have gotten themselves over-extended, there are estate sales, divorce sales. It’s the normal stuff, but more of it. And if the market’s not at the absolute bottom now, it’s pretty close. Once it starts going back up, and sellers feel like it’s coming back up, they become a lot less flexible. Interest rates are low. If you have decent credit, you can get a mortgage.”

Still solid

Dey agreed, and said as a long-term investment, there might not be anything over the past couple decades that can top Nantucket real estate.

“It’s only gone up over the past 10 years,” she said. “All the other financial indices are negative, but real estate is still a good investment, if you’ve got the capital and you’re willing to be patient.”

Veteran agents like Ranney, Hawkins and Dey have experienced the ebb and flow of island real estate before, and they are prepared to ride out the current trough. Ranney sees it lasting at least two years.

“There is no reason right now for anybody to be buying things, unless there is a particular property they’ve always wanted,” he said. “It’s going to be a while before the economy recovers. Banks aren’t really even doing all that much lending. The whole national economy is reflected in Nantucket. All those people who were using their Wall Street bonuses, that’s not happening anymore.”

As for the real-estate industry itself, agents said they expect to see quite a bit of belt-tightening, with some brokers probably in the market for new work to replace or supplement their incomes.

“Just like every other business, it’s going to be a tough time over the next little while,” Beaugrand said. “There’s not going to be the level of business there was in the past. You have to make sure your dollars are being spent wisely. I think you’ll see some dropouts. People who haven’t committed themselves to this as a full-time occupation will look to do something else.”

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